IRS Form 5227 (Split-Interest Trust Information Return) reports the income, expenses, and distributions of certain types of split-interest charitable trusts.
The types of trusts that file Form 5227 include:
- Charitable Remainder Trust (CRT)
- Charitable Lead Trust (CLT)
- Pooled Income funds
- Charitable Remainder Annuity Trust (CRAT)
- Charitable Remainder Unitrust (CRUT)
- Charitable Lead Annuity Trust (CLAT)
Example Form 5227 Filing Obligation
John Doe contributes $1,000,000 of cash to create a charitable remainder annuity trust (CRAT). The trust will pay John an annual annuity of 8% ($80,000) per year for 10 years, and the remaining assets will be distributed to Florida Charity Inc., a Section 501(c)(3) public charitable organization.
The trust is a split-interest trust because it has a noncharitable lead beneficiary (i.e., John Doe) and a charitable remainder beneficiary (i.e., Florida Charity Inc.). The trust must file an annual Form 5227 to comply with the regulations. The net income earned within the trust is generally exempt from federal income taxes because the trust itself is not a taxable entity. However, the unitrust or annuity distribution to the lead noncharitable beneficiary may carry some taxable income to that beneficiary.
The $80,000 annuity distribution to John will include an allocation of the investment income earned within the trust. John will receive a Schedule K-1, which reports his allocation of the trust income.
Video Tutorials on Form 5227
Please view our video tutorials below on how to prepare Form 5227 for various scenarios:
- Form 5227 for Charitable Remainder Annuity Trust (CRAT)
- Form 5227 for Charitable Remainder Unitrust (CRUT)
- Form 5227 for Charitable Lead Annuity Trust (CLAT)
- Form 5227 for Net Income Charitable Remainder Trust (NICRUT)
- Form 5227 for Net Income with Makeup CRUT (NIMCRUT)
Additional Information
Taxpayers seeking more information on split-interest trusts can review the Form 5227 Instructions and visit the IRS website.